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Bitcoin maintained its bullish stance this week and rose to an all-time high beyond $123,000 on Wednesday with large-scale buying being witnessed. This intensified rate of accumulation has exceeded the everyday mining activities, indicating a significant market change in momentum.
According to Crypto Market analysts, increasing institutional demand is most likely a key element in this cycle, unlike past bull runs driven by retail. Emir Ibrahim, a crypto liquidity provider (Zerocap) analyst, pointed to the change, including the growing presence of structured investment strategies and the convergence of the digital asset space with traditional finance.
Institutional investors are becoming more confident in the crypto asset and recent regulatory changes in the United States are also fueling the rally. The introduction of certain regulatory clarity has assisted in decreasing risk worries and enhancing Bitcoin's position as an investment portfolio asset of hedge funds, family offices, and asset managers. Consequently, liquidity has increased, and the market infrastructure has continued to expand, adding to the price rally.
The sharp move in spot price has also triggered a reaction in the derivatives market. Bitcoin-driven derivative contracts recorded over $88.5 million in liquidations on Wednesday, with short positions contributing about $73.55 million. This suggests that most of the traders who had bet on a decline were caught unawares by the sudden movement of the price, which led to the forced closure of their positions.
Moreover, the high volume of liquidations often indicates increased volatility and can reinforce price trends in the short term. These developments added upward pressure in the form of short sellers closing, which helped further drive the rally. With the market responding accordingly to these changes, trading sessions are recording an increase in volume and open interest as more players in the marketplace become active.
Also Read: Crypto Prices Today: Bitcoin Price at $119,000, Ethereum Surges 8.4% as Altcoins Rally
In addition to technical market dynamics, broader macroeconomic factors are also contributing to the digital asset surge. There is growing market anticipation that the US Federal Reserve may initiate a rate cut in September. On Tuesday, US Treasury Secretary Scott Bessent stated in an interview with Fox Business that the Federal Reserve should begin an easing cycle, recommending a 50-basis-point cut.
Lower interest rates benefit risk-on assets such as cryptocurrencies. The lower cost of capital will lower the opportunity cost of non-earning assets, including Bitcoin and Ethereum, and enhance portfolio rebalancing by converting government bonds into riskier investments. This change in investors' position has been reflected across the crypto sectors.
Ethereum, the second-biggest cryptocurrency in market capitalization, has also achieved positive results in the last week. On Wednesday, it reached $4,788, near the all-time 2021 highs. This indicates that the overall crypto market is witnessing a rally similar to that of Bitcoin.
